What is chapter 7 bankruptcy?
In a chapter 7 bankruptcy case, the bankruptcy trustee gathers and then sells the debtor’s nonexempt assets and proceeds to pay the creditors following the Bankruptcy Code. Some portions of the debtor’s property may be subject to mortgages that pledge the property to other creditors. The code allows the debtor to keep specific exempt properties, but the remaining assets will be liquidated.
One of the main reasons for filing a chapter 7 bankruptcy is to give the debtor the chance of a fresh start. A chapter 7 discharge releases debtors from any personal liability and prevents creditors from taking any further action against them. However, always consult with legal counsel before filing due to the many exceptions regarding chapter 7 bankruptcy.
In this particular bankruptcy case, the debtor’s primary concerns are to retain the exempt property and to receive a discharge that will cover as many debts as possible.
The main reason why chapter 7 is a good option is that it releases you of any obligation to pay off qualifying debt, including getting rid of your credit card balances, loans, and other unsecured debt. However, potential debtors should realize that filing a chapter 7 bankruptcy may lead to property loss.
In addition, to provide complete relief to a debtor, the Bankruptcy Code allows for a chapter 7 case to be cased under chapters 11, 12, or 13 provided the debtor qualifies to file under those chapters.
Who can apply for chapter 7 bankruptcy?
To qualify for filing, the debtor can be an individual or a corporation. However, since corporations do not receive a bankruptcy discharge, businesses often do not file chapter 7 bankruptcy. The relief is available irrespective of the debt or whether the debtor is solvent or insolvent.
This bankruptcy case is not applicable if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor’s absence in court or the debtor did not comply with the court.
You also need to receive credit counseling from a professional credit counseling company to qualify for chapter 7 bankruptcy.
Why should I consider chapter 7 bankruptcy?
It is the best option for you if:
- You own a small number of properties.
- You have medical bills, credit card balances, and personal loans.
- Your family income does not exceed the given state median for your family size.
What are the benefits of a chapter 7 bankruptcy?
Here are some reasons why it can be helpful:
- The filing is quick and takes about three to six months to complete.
- A full discharge is applicable in the case of chapter 7 bankruptcy, and hence there is no need for a filer to pay into a three-to-five-year repayment plan.
- Most debts are given a full discharge except I the cases of student loans or unpaid child support.
- In this case, there is an option to protect your property. You can keep your necessities and can even retain a house or a car in some cases. This applies if you are current on the payments and attest to your ability to continue making those payments after the bankruptcy case.
What are the essentials needed to file a chapter 7 bankruptcy?
For filing a petition, the debtor must additionally provide:
- A list of your assets and liabilities
- Your current income and expenditures
- Your executory contracts and unexpired leases
- A statement of your financial affairs
- A copy of your tax return of the most recent tax year
Individual debtors must provide in addition to the above:
- A certificate of credit counseling from an accredited company
- A copy of the debt repayment developed by them
- Payment from employers 60 days before filing
- A statement of monthly net income
- Record of debtor’s interest in state or federal education or tuition accounts
For further information and to ensure a way to secure your financial future, schedule a complimentary consultation with The Wright Law Alliance. We have over 25 years of experience helping Georgia residents successfully navigate bankruptcy and help individuals and companies get back on their feet. Call us now.